American Law and Jurisprudence on Fracing · © 2012 Haynes and Boone, LLP American Law and...

© 2012 Haynes and Boone, LLP

American Law and Jurisprudence on Fracing

United States Energy Association

Washington, DC

January 30, 2013

Michael J. Mazzone

Haynes and Boone, LLP

Houston, Texas

[email protected]

mailto:[email protected]


Regulatory Overview and Responses

to Fracing

• Basic Postulates

• Background

• Environmental Concerns Posed By Fracing

• Fracing Regulation

• Considerations Pertinent to Fracing Regulation

• Conclusion

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Basic Postulates • Hydraulic fracturing or “fracing,” coupled with

horizontal drilling, has opened up vast

resources of shale gas, as well as oil,

throughout the U.S.

• These techniques also have brought oil and

gas activities in close proximity to populated

areas raising environmental concerns with

local residents that have garnered media

attention.

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Basic Postulates (cont’d)

• This public focus has lead to increased

regulation and enforcement.

• Regulation of fracing, like of other activities,

should be based on, and driven by, facts and

science, rather than media perception and

politics.

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Background

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What is Fracing?

• Fracing is not a new development – First frac job was performed in 1947

– Millions of wells have been safely fraced in the last 60 years

• Fracing is a well stimulation technique – Injection of fracing fluid opens up new channels in rock that

makes it possible to extract oil and gas from areas where it would have been impossible before

– Injection of proppant allows cracks to remain open

– Injection fluids are 90% water 9.5% sand and .5% chemical additives

• Generally fracing is done thousands of feet below the surface and below the water table

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Horizontal Drilling and Fracing

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Shale Formations • Marcellus Shale – New York, New Jersey, Maryland,

Pennsylvania, West Virginia, Ohio, Virginia

• Barnett Shale – Texas

• Bakken Shale – North Dakota, Montana

• Haynesville Shale – Texas, Arkansas, Louisiana

• Eagle Ford Shale – Texas

• Utica Shale – New York, Ohio, Pennsylvania

• Internationally – Poland, Israel, China, Australia, France,

U.K., and many more

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President Obama’s 2012 SOTU

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“We have a supply of natural gas that can last America nearly 100 years. And my administration will take every possible action to safely develop this energy. Experts believe this will support more than 600,000 jobs by the end

of the decade.”


Practical Considerations

• It takes approximately 23 days to drill a well, a week to frac, and

two weeks for flowback before a well is connected to a pipeline.

• A rig can be up to 1.5 miles away from the formation.

• One pad site can support up to 32 wells.

• An average pad site is three to five acres.

• Once a well is connected to a pipeline and begins producing,

80%-90% of the pad site can be restored.

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The Fracing Debate

• Proponents

– Opens up new

reserves

– Keeps energy supply

domestic

– Clean natural gas

– Creates jobs

– When done properly,

no environmental

risks (e.g. University

of Texas study)

• Opponents

– Environmental

issues?

• Groundwater?

• Pollution?

• Earthquakes?

– Would prefer to see

focus on renewable

energy

– Water use

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Environmental Concerns

Alleged • Air quality

– volatile organic compound and other emissions

– greenhouse gases (GHGs), including methane

• Water quality

– aquifer contamination

– surface contamination

• Water quantity -- consumptive use

• Earthquakes

• Noise, odor, light, and traffic

• Land use compatibility

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Greenhouse Gases • “Compared to coal, the [GHG] footprint of shale is at least 20%

greater and perhaps more than twice as great on the 20-year

horizon . . .” “Methane and the greenhouse-gas footprint of

natural gas from shale formations,” R. Howarth et al. (Cornell

2011)

• “GHG impacts of shale gas are . . . only 56% that of coal.” “The

Greenhouse Impact of Unconventional Gas for Electricity

Generation,” N. Hultman et al. (Univ. of MD 2011)

See http://www.energyindepth.org/new-study-debunks-cornell-ghg-

paper-again/

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http://www.energyindepth.org/new-study-debunks-cornell-ghg-paper-again/














• “Carbon dioxide emissions in the U.S.

are at their lowest in 20 years. It’s not

because of wind and solar power.” – Bjorn Lomborg, author of The Skeptical Enviornmentalist, in

Why are Carbon Dioxide Emissions Down so Much in the

U.S.”? Fracking. http://www.slate.com/articles/health_and_science/project_syndicate

/2012/09/thanks_to _fracking_U_S_carbon

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Alleged Aquifer Contamination

• Pavillion, WY (Encana) – Comment Period Recently Extended for the 3rd

time

• Dimock, PA (Cabot Oil & Gas) – EPA Tests Show No Sign of Contamination

• Parker County, TX (Range Resources) – EPA Recently Dropped Case after Repeated

Blunders See Fact-Based Regulation for Environmental Protection in Shale Gas Development (UT Energy

Institute 2012)

http://energy.utexas.edu/index.php?Itemid=160&id=151&option=com_content&view=article

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Water Use in Shale Gas

Development • Barnett Shale Water Uses

– natural gas industry: less than 1%

– public water supply: 82.5%

– Irrigation: 6 %

– industry/mining: 4.5%

– Livestock: 2 %

• Unlike other uses, the use of water in fracing a well is temporary.

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• Geologists and politicians have been arguing for about whether

fracing can cause earthquakes.

• A comprehensive study released by the National Research

Council found they can, but that the number of earthquakes

linked to fracing operations is very small.

• The study concluded the greatest risk of earthquakes comes not

from drilling deep shale or from fracing, but from pumping the

wastewater from those operations back down into deep

sandstone or other formations for permanent disposal.

See http://www.scientificamerican.com/article.cfm?id=fracking-can-cause-

earthquakes (June 15, 2012)

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Earthquakes and Fracing

http://www.scientificamerican.com/article.cfm?id=fracking-can-cause-earthquakes








• A seismologist at the University of Texas at Austin concluded that

injection-triggered quakes might be more common than thought, but

noted that fluid injection may trigger earth quakes only if fluids reach

and relieve friction on a nearby fault. See http://www.livescience.com/22151-fracking-earthquakes-fluid-injection.html

• Ohio regulators studying the cause of minor earthquakes near

Cleveland concluded that fracing had nothing to do with the tremors

that were very likely caused by the injection of wastewater into deep

disposal wells.

• Ohio is now imposing new regulations governing the placement and

operation of these deep disposal wells. Some or all of the wastewater

injected down those Ohio wells came from drilling and fracing

operations, but not from fracing per se. See

http://www.forbes.com/sites/christopherhelman/2012/03/12/epa-doubts-its-own-anti-

fracking-study-while-ohio-determines-fracking-did-not-spawn-earthquake-swarm/

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Earthquakes and Fracing (cont’d)

http://www.livescience.com/22151-fracking-earthquakes-fluid-injection.html










Regulation of Oil and Gas Activities

Federal State Local

Air Quality X X

Water Quality X X

Waste Management X X

Chemical Disclosure X X

Water Quantity/Use X

Earthquakes X

Noise, Odor, Light & Traffic X

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Federal Regulation

of O&G Activities

• General Pollution and Other

Environmental Programs

• Oil and Gas Leasing

– Regulatory requirements – DOI BLM

Proposed Regulation (May 4, 2012)

– Lease provisions

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Federal Pollution Programs • Clean Water Act (CWA)

• Clean Air Act (CAA)

• Underground Injection Control (UIC) Program of Safe Drinking

Water Act (SDWA)

• Resource Conservation and Recovery Act (RCRA)

• Comprehensive Environmental Response, Compensation and

Liability Act (CERCLA)

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Common Elements of Federal Pollution

Programs*

• Federal government sets regulatory floor.

• States may assume responsibility or qualify for federal

programs.

• Regulation is by rule or permit.

• Permit requirements are based on

– technology

– ambient environment.

• Significant sanctions (administrative, civil, and criminal) may be

imposed for non-compliance.

• Agencies and, in some instances, citizens may sue not only for

noncompliance, but also to abate imminent and substantial

threats.

* Excluding CERCLA

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Federal O&G Regulation

• CWA – Effluent Limitations

– NPDES Permits

• Process – produced water, fracing

flowback

• Stormwater – contaminated runoff

from well pad

– Oil Spill

• spill prohibition

• planning and response requirements

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Federal

O& G Regulation (cont’d.) • CAA

– Permitting under SIPs – individual and by rule

– NSPS/NESHAPS – Green completions

– Section 112(r) – General Duty Clause

• RCRA – hazardous waste oil and gas exemption

• UIC/SDWA • Class II permitting

• fracing exemption – proposed EPA guidance on use of diesel

• CERCLA -- petroleum exemption 31


Other Pertinent

Environmental Programs

• Toxic Substances Control Act (TSCA)

• Emergency Planning and Community Right to Know Act

(EPCRA)

• Endangered Species Act (ESA)

• Migratory Bird Treaty Act (MBTA)

• National Environmental Policy Act (NEPA)

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EPA Comprehensive Fracing

Study

• Progress Report Released

in December 2012

• Full Results expected in

2014

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http://sustainability.asu.edu/news/wp-content/uploads/2012/04/epa_logo.jpg


State O&G Regulation

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• Permitting requirements

• Well Construction

Requirements, e.g., casing,

blowout preventers

• Testing requirements

• Water withdrawal, disposal, recycling regulations

• State water and air quality regulations

• Impact fee statutes

• Moratoriums

• Location Restrictions


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Source API


Local O&G Regulation

• Zoning

• Setbacks

• Noise

• Light

• Odor

• Traffic

• Moratoria

• Preemption

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Private Party Litigation

• None have been successful in

implicating fracing

– Contamination

• Air

• Groundwater

– Noise, odors and light

– Breach of contract

– Municipal litigation

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Regulatory Litigation

• Government enforcement actions against exploration and

production companies

• Challenges to agency action in promulgating regulations

or issuing (or not issuing) permits

• Challenges to zoning requirements or to state laws

preempting local zoning

• Challenges to moratoria, and alleged takings

42


Summary of Fracing Risks and

Considerations

• Effluent/emission

limitations

• Operational specifications

• Chemical disclosure

• Testing and monitoring

• Construction

Specifications

• Moratoriums

• Locational restriction

• Local Bans / Zoning

Restrictions

• Private Party Litigation

• Environmental review and

permitting

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• Law Applicable to Hydraulic

Fracturing in the Shale States – By: Thomas E. Kurth, Michael J. Mazzone, Mary S. Mendoza

and Christopher S. Kulander

http://www.haynesboone.com/american-law-and-

jurisprudence-on-fracing-2012/


American Law and Jurisprudence on Fracing

United States Energy Association

Washington, DC

January 30, 2013

Michael J. Mazzone

Haynes and Boone, LLP

Houston, Texas

[email protected]

mailto:[email protected]

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